Tencent-led consortium buys 10% stake in Universal Music Group, Latest Business News - The New Paper

Tencent-led consortium buys 10% stake in Universal Music Group

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PARIS/HONG KONG : A Tencent-led consortium is taking a 10 per cent stake in Vivendi's Universal Music Group (UMG), valuing the music label that houses Lady Gaga and The Beatles at €30 billion (S$45 billion) and giving the Chinese company a global backstage pass.

The deal allows both companies to expand in a recovering global music market, giving Tencent more access to US artists while UMG can tap into the Asian market, including big- selling K-pop stars.

French media conglomerate Vivendi said on Tuesday it had finalised the sale of an initial 10 per cent of the world's largest music label to the Tencent consortium, which also has the option to buy up to 10 per cent more by January 2021 on the same price basis.

Vivendi is seeking to cash in on the music industry's revival, driven by a growing subscription and advertising-based music streaming services and the deal gives UMG an enterprise value of €30 billion. Global recorded music revenues rose 9.7 per cent last year from 2018.

The initial deal would be followed by a second one allowing Tencent Music Entertainment to buy a minority stake in UMG's greater China subsidiary.

"Universal has been enjoying increased revenues for the last five years. With the company in a strong position, it can make sense to capitalise on the valuation with a minority sale at this point in the growth cycle," said MB Capital director Marcus Bullus on the deal. - REUTERS